Southwest State Bank Case - Profitability/Swot Analysis

Key Trends Identified in SSBs Profitability from 1991 through 1993 check to the metrical ratios in Table-1, SSB had the following major trends in availability during the time of 1991 to 1993: ?Decreasing return on equity (ROE) - shareowner return ?Gradual & unsteadily diminish return on assets (ROA) - managerial strength ?Decreasing net non pastime margin ? less profit earned on non- entertain banking components ?Increasing earnings dispel ? ca-ca established effective processes of borrowing and lending money with minor immediate threat of competitors ?Unfavorably increasing operating efficiency ratio - there is an otiose of operating cost in relation to operating revenues gene sited by SSB. ?Declining credit adventure/depositor risk ? decline of bad loans, increased market values of easily loans relative to amount of deposits. ?Increasingly higher interest rate risk - meaning that there is about 30% of excess interest sensitive assets compared to interest sensitive liabilities. SSBs Major Strengths and Weaknesses in Terms of Profitability at Year-End 1993 According to the calculated ratios in Table-1, SSB had the following strengths and weaknesses.

Strengths: ?Slightly increasing net interest margin (NIM): This indicates favorable control and focusing of interest income and interest expenses, in relation to SSBs total assets. ?Increased earnings spread: This indicates that SSB has established effective borrowing and lending processes. This also indicates a period of non-increasing competition, so SSB can continue to operate on this strength for a little while. ?Consistently steady asset utilization ratio: This reflects a consistent portfolio management policy, considering the admit and mix on SSBs assets. When compared to the industry average for SSBs local area, management can determine if any changes should be made in this area. Weaknesses: ?Decreased return on equity (ROE): which indicates a decreasing rate of... If you want to get a full essay, suppose it on our website: Orderessay

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